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In our series of three articles looking at the digitization of transport we will explore some of the most impactful areas of this new paradigm:

The customer

Management of services

Infrastructure

This first article will look at the customer, the driving force behind the digitization of the service.

Why digitize?

There has been a major shift in consumer perception and expectation of how a service works. This can be attributed to the rise of the Internet and in particular to the consumezisation of the Internet with platforms like Facebook and apps like Uber. Gartner has been watching and predicting outcomes from this consumerization and expect fluidic and dramatic changes in how services expect to be delivered.

Our customers are rapidly becoming technology sophisticates and as we move well into the 21stcentury, those customers will be the true digital natives, with an expectation that the products and services they use are digital. In addition, public transport is seeing increasingly heavy usage patterns as people including those in less developed countries, move into urban areas. Transport is an area that is now crossing the chasm into the age of digitization and with that comes challenges in how to handle the end to end customer experience and at the same time optimise on the use of technology to enhance this experience.

Challenges of serving the customer in a digitized transport system

One of the challenges and also the greatest benefit of a digitized transport system is the offering of a contactless payment method.

Contactless ticketing challenges: To truly embed contactless ticketing into a given transport system, it needs to be holistic. That is, it needs to work across every touch point in the transport eco-system – from carriers, to passengers, to local authorities and transport providers. Each must be enabled to proffer, moderate and accept the contactless method. Taking the system and extending it to cover all modes of transport, including, car shares, trains, buses, taxis and even bike hire schemes, is also part of the remit of the contactless ticketing network.

As part of this challenge, industry bodies such as the Smart Ticketing Alliance and Smart Card Alliance are working towards creating standards and industry collaboration, similar to those in the mobile phone ad banking sectors to encourage interoperability between transport systems throughout Europe.

Contactless ticketing benefits: The paramount benefit of offering a contactless ticketing system to customers is convenience. Urban transport is seeing some negative changes, including increased commute time. The average commute in London is 74 minutes and in New York it’s 75 minutes. Anything that can speed up a person’s journey is welcome and a quick swipe of a card, as opposed to pushing a ticket through a barrier, can do that – how often have we experienced a ticket getting stuck in a barrier or being held up by someone experiencing that?

People like contactless too. It’s easy to use. You don’t have to remember to ‘top up’ cards and you can use the device, such as a mobile phone, that you use for all of your other transactions. In fact the idea of contactless payments, in general, is taking off. In the UK there are 76 million contactless cards issued (more than the total population). In Australia, two thirds of the population own a contactless card and 53% use those regularly. In the US 80% of those who have contactless cards used them once a week. The reason for the popularity of contactless is the removal of barriers through ease of use and contactless ticketing is just another application of this method.

Transport for London is one of the first systems in the world to embrace contactless ticketing in a holistic manner. TfL have found this new system, which is integrated across almost all modes of transport in London, to be a success, with 20% of all pay-as-you go journeys now contactless less than a year since its launch.

One of the other major benefits to both the consumer and the transport provider is the integrated nature of the contactless ticketing system. Contactless is a more personalized and transparent method of ticketing and provides more insightful audit. Users can keep track of their payments and check out their travel habits in a way traditional ticketing doesn’t allow. Transport providers can offer enhanced services and have constant contact with their customers.

Security is a possible area of concern for contactless ticketing. However, as tickets are generally at the lower price bracket they in turn have a lower barrier to uptake. Further, older technologies incorporating magnetic strips could be counterfeited, whereas many contactless ticketing systems utilize modern security techniques and authentication methods.

Strasbourg Transport Company: a modern day contactless ticketing success

The Strasbourg Transport Company (STC) is a successful example of how contactless ticketing can work. They have rolled out a Near Field Communication (NFC) method of transport ticketing to the French cities of Strasbourg and Caen. The ticketing system is based on a mobile app known as U’GO which utilizes NFC technology to purchase tickets on public transport across the cities.

One of the great benefits of the system is that it is entirely ticketless. The cost of the new system is less than a tenth of the cost of a paper-based ticketing system, savings in paper and printing alone being part of this cost reduction. The system itself is entirely turnkey, with a connected mobile app, website and information system. The system has taken into account modern requirements of multicultural, connected, smart cities with multi-lingual web content and adaptive design for use across device types. The approach that STC is using is an all-encompassing one – supporting customers from ‘door-to-door’ and embracing dialogue and discourse through online content and social outlets.

In a survey on the U’GO ticketing system, 90% said it was a useful application and 85% said they would be continued users of the system.

The future

Contactless ticketing opens up a number of new avenues to make travelling easier, cheaper and more convenient. Contactless ticketing has the potential to offer other add on value services such as vouchers and gift opportunities. As well as cutting ongoing costs, it allows a transport provider to truly interact with their consumers and build a trusted relationship.

I’m probably as fed up as you are with a lot of the stuff that gets written about “mobile payments” – almost as fed up as I am with the nonsense that people write about “mobile wallets”, but that’s a whole different discussion.

Why am I fed up? Well, basically because many of the blog posts and articles and much of the commentary around mobile payments cast too wide a net and addresses products, solutions or developments that are way wide of the mark when compared against a proper expression of a mobile payment implementation. All of this noise helps to perpetuate the idea that anything which involves:

a mobile phone, and

a payment of some sort

automatically qualifies as a “mobile payment”.

So, if I take out my Samsung Galaxy S4 and use the Chrome browser to call up the Tesco Dotcom site, place an order for groceries to be delivered over the weekend and then pay for the goods by entering my credit card details, then that’s a mobile payment, right? Or if my friendly neighbourhood plumber fixes that annoying leak under the sink and he accepts my credit card payment (well, it was an emergency!) by using his iPhone connected to an iZettle card reader, I’ve just made a mobile payment, haven’t I?

Compare that to walking into your nearest Starbucks with your Starbucks Rewards app open on your iPhone and presenting the “Pay” barcode to the scanner at the till to buy a caramel macchiato and a chocolate muffin – see the difference? It’s not the best example of a mobile payment by a long way, but at least it’s heading in the right direction insofar as you haven’t had to supply any payment credentials at the point of interaction to effect the payment (as in the Tesco example above) and you haven’t had to provide your plastic card to complete the transaction (as in the payment to the emergency plumber). Instead, information related to a payment card – in this case, the Starbucks Rewards card linked to a pre-paid account has been transferred from your mobile phone to the point of sale terminal, and all you had to do was wave your iPhone screen in front of the scanner.

If you want to get technical about it, you had to open your iPhone, which requires a screen swipe and (hopefully) a passcode; then you had to look for and open the Starbucks app; then you had to click on the “Pay” button and then orient the iPhone screen in such a way that the barcode could be read by the awkwardly positioned laser scanner… But it was easy, wasn’t it? And you got a star for making the purchase with your Starbucks Rewards card (in your iPhone app). So maybe it wasn’t that easy and it could have been better designed to ensure a smoother, more convenient customer experience, but it’s still more like a “real” mobile payment than the other examples above, despite its sub-optimal implementation.

So, in my view, there are true mobile payment solutions and there are other implementations which are “mobile payments” in name only. But what makes a good mobile payment product, as far as I’m concerned? Well, there are a number of factors at play in building a fit for purpose solution in the mobile payments space, including security, functionality and ubiquity of acceptance, but most of them revolve around the customer and the customer’s experience of using the mobile payment solution. I talk about this aspect of mobile payments and what customers are looking for in a mobile payment product in my recent white paper on mobile payments as well as discussing what makes a mobile payment a mobile payment. Take a look at it: it might help you appreciate why I get fed up with some of the stuff that I read about “mobile payments”.